Study: GOP Plan Cuts Medicaid Rolls in Half

by David Pittman David Pittman Washington Correspondent, MedPage Today
October 25, 2012

WASHINGTON -- The plan offered by the Republican presidential ticket to turn Medicaid into a block grant program run by the states would cut enrollment in half, a study found.

Between repealing the Affordable Care Act (ACA) and its Medicaid expansion and moving to a block grant program, the plan proposed by GOP vice presidential nominee Rep. Paul Ryan (R-Wis.) would cut enrollment between 31.3 million and 37.5 million, an analysis by the left-leaning Urban Institute found.

The report compared Medicaid enrollment and spending under both the ACA and the plan offered by Ryan the last two years as chair of the House Budget Committee.

"The proposed changes and reductions in federal financing for Medicaid under the House Budget Plan would almost certainly worsen the problem of the uninsured and strain the nation's safety net," read the report, which was commissioned by the Kaiser Commission on Medicaid and the Uninsured.

Under the block grant program proposed by Ryan and a very similar one offered by Romney, Medicaid spending would be capped annually and divvied up to states based on a formula. Spending would only increase to keep up with population growth and inflation.

But the growth rates of both population and inflation typically fall below the growth rate of Medicaid spending, leaving a gap between expected services and funding. However, states would have more flexibility to set eligibility and coverage as well.

Ryan says the move will save up to $800 billion in 10 years. The Urban Institute report says repealing the ACA and moving to a block grant would save $1.7 trillion in the next decade.

Not only would enrollment fail to make up for the lack of Medicaid spending, payments to providers would also suffer, the report said. "Payments to providers could fall by 32% relative to the baseline," it noted.

In the final presidential debate this week, Romney praised the plan as one that states would embrace.

"As a governor, I thought please, give me this program. I can run this more efficiently than the federal government, and states, by the way, are proving it," Romney said. He mentioned Arizona and Rhode Island as examples of states running cost-effective programs.

President Obama, the man Romney is trying to replace in the White House, has offered a very different plan for Medicaid. Under his ACA, Medicaid eligibility would effectively expand to 138% of the federal poverty level. The Urban Institute study estimates Medicaid enrollment will top 75 million under the expansion.

But the Supreme Court ruled in June this expansion was only optional for states. The report assumes all states would adopt the expanded Medicaid program, although some states have already said they won't do so.

The Urban Institute report is the second this month to claim the Romney/Ryan plan for Medicaid would raise the number of uninsured. A Commonwealth Fund study said the plan would increase the number of uninsured by 12 million by 2022.

But there is dispute over how many uninsured the plan would create. Vice President Joe Biden, during the vice presidential debate earlier this month, said Ryan's Medicaid plan would knock 19 million people out of the program.

The Urban Institute pegs the number between 14.3 million and 20.5 million. If states maintained their current spending growth rate, the number of uninsured patients will be on the higher side. If states increased spending to make up for the decrease in the money they're getting from the federal government, the number of uninsured will be lower.

The authors also estimated that federal spending on Medicaid would drop to $2.8 trillion over the next decade -- a steep fall-off from the $4.6 trillion expected with the ACA's expansion. The study then calculated how much enrollment would have to fall, given that reduction in federal spending and assuming no state increased its spending.

"Medicaid's ability to continue [its] many roles in the health care system would be significantly compromised under this proposal, with no obvious alternative to take its place," the report concluded.

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